Working Paper: NBER ID: w19255
Authors: Robert C. Feenstra; Robert Inklaar; Marcel Timmer
Abstract: We describe the theory and practice of real GDP comparisons across countries and over time. Effective with version 8, the Penn World Table (PWT) will be taken over by the University of California, Davis and the University of Groningen, with continued input from Alan Heston at the University of Pennsylvania. Version 8 will expand on previous versions of PWT in three respects. First, it will distinguish real GDP on the expenditure side from real GDP on the output side, which differ by the terms of trade faced by countries. Second, it will distinguish growth rates of GDP based on national accounts data from growth rates that are benchmarked in multiple years to cross-country price data. Third, data on capital stocks will be reintroduced. Some illustrative results from PWT version 8 are discussed, including new results that show how the Penn effect is not emergent but a stable relationship over time.
Keywords: real GDP; Penn World Table; purchasing power parity; economic comparisons
JEL Codes: O47
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| real GDP on the expenditure side (RGDP_E) (E20) | interpretation of economic standards across countries (F40) |
| real GDP on the output side (RGDP_O) (O40) | interpretation of economic standards across countries (F40) |
| terms of trade (F14) | real GDP on the expenditure side (RGDP_E) (E20) |
| terms of trade (F14) | perceived economic well-being (I31) |
| real GDP on the expenditure side (RGDP_E) (E20) | real GDP on the output side (RGDP_O) (O40) |
| changing reference prices (P22) | GDP calculations (E20) |